Comments will be due Nov. 17 on a proposal that aims to provide “more certainty” for mortgage servicers about when to provide periodic statements to consumers about their bankruptcy case.
The proposal, issued by the Consumer Financial Protection Bureau (CFPB) Oct. 4, is in response to technical aspects of the agency’s 2016 Mortgage Servicing Final Rule amending certain aspects of its mortgage servicing rules. Among other things, the 2016 final rule addressed Regulation Z’s (Truth in Lending Act) periodic statement and coupon book requirements when a person is a debtor in bankruptcy.
CFPB said that the 2016 amendments “may create unintended challenges and be subject to different legal interpretations.”
For example, CFPB said in issuing the proposal, the 2016 amendments include a single-billing-cycle exemption from the requirement to provide a periodic statement or coupon book in certain circumstances after one of several specific triggering events occurs, resulting in a servicer needing to transition to or from providing bankruptcy-specific disclosures.
The single-billing-cycle exemption, CFPB noted, applies only if the payment due date for that billing cycle is no more than 14 days after the triggering event.
The 2016 Mortgage Servicing Final Rule also includes specific timing requirements for servicers to provide the next modified or unmodified statement or coupon book after the single-billing-cycle exemption has applied, CFPB said.
“Based on feedback received regarding implementation of the 2016 Mortgage Servicing Final Rule, the Bureau understands that certain aspects of the single-billing-cycle exemption and timing requirements may be more complex and operationally challenging than the Bureau realized, and that the relevant provisions may be subject to different interpretations,” the agency noted.
The effective date proposed is April 19, 2018, the same date that the sections of the 2016 rule that the proposal would amend become effective.
Proposal: Mortgage Servicing Rules Under the Truth in Lending Act (Regulation Z)